His Name Was Jeremy Stein: Fed's Lone Bubble-Spotter Resigns

Tyler Durden's picture


The last year or two has seen a deluge of Fed speakers pay lip-service to watching/monitoring/keeping-an-eye-on potential bubbles... but as yet having found none... That is all except one - Jeremy Stein - who explicitly called out high yield bonds as in a 'frothy' bubble last year... it appears he has grown weary of smashing his head against that wall...


Stein plans to return to teaching at Harvard but in his resignation letter noted that more work is needed on the job market and that the financial market needs strengthening.

Stein's Feb Speech here

Stein's warning...

One of the most difficult jobs that central banks face is in dealing with episodes of credit market overheating that pose a potential threat to financial stability. As compared with inflation or unemployment, measurement is much harder, so even recognizing the extent of the problem in real time is a major challenge. Moreover, the supervisory and regulatory tools that we have, while helpful, are far from perfect.


Waiting for decisive proof of market overheating may amount to an implicit policy of inaction on this dimension

Stein's resignation letter...

Dear Mr. President:


April 3, 2014




I am writing to let you know that I intend to resign as a member of the Board of Governors of the Federal Reserve System on May 28,2014, and return to my teaching position in Harvard University's department of economics.


It has been a great privilege to serve on the Federal Reserve Board. During my time here, the economy has moved steadily back in the direction of full employment, and a number of important steps have been taken to make the financial system stronger and more resilient. There is undoubtedly more work to be done on both dimensions.


But under the leadership of Chairman Ben Bemanke and Chair Janet Yellen, and thanks to  the efforts of our colleagues on the Federal Open Market Committee and around the  entire Fed system, much progress has been made as well. Working alongside these talented and selfless men and women has been an extraordinarily rewarding experience.


I am grateful to you, and to the Senate, for having given me the opportunity to be involved with ·these remarkable people and this special institution.

And The Fed's farewell note...

Jeremy C. Stein submitted his resignation Thursday as a member of the Board of Governors of the Federal Reserve System, effective May 28, 2014.


Stein, who has been a member of the Board since May 30, 2012, submitted his letter of resignation to President Obama and plans to return to his teaching position in Harvard University's department of economics.


"Jeremy has made important contributions and served as an intellectual leader during his time at the Board," said Federal Reserve Chair Janet L. Yellen. "His understanding of monetary policy and markets as well as his expertise in banking and financial regulation has proven invaluable in his service to the Federal Reserve and the country. My colleagues and I will miss him."


Stein, 53, was appointed to the Board by President Obama to fill an unexpired term that ends January 31, 2018. During his time on the Board, he served on the Committee on Bank Supervision and Regulation, and as co-chair of the Financial Stability Board's Official Sector Steering Group on reforming interest-rate benchmarks. This international group of regulators has been charged with developing alternative reference rates and transition strategies in the wake of the well-documented problems with LIBOR.


While at the Board, Dr. Stein has been on leave from his position as the Moise Y. Safra Professor of Economics at Harvard University, where he taught courses in finance in the undergraduate and Ph.D. programs. From February to July 2009, Dr. Stein served in the Obama administration as a senior adviser to the Secretary of the Treasury and on the staff of the National Economic Council.


Before joining the Harvard faculty in 2000, Dr. Stein taught finance at the Massachusetts Institute of Technology's Sloan School of Management. Prior to joining the MIT faculty, Dr. Stein was an assistant professor of finance at the Harvard Business School from 1987 to 1990.

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Thu, 04/03/2014 - 11:10 | 4621211 papaswamp
papaswamp's picture


I'm outta here Bitchez!!! This place is fucked.

Thu, 04/03/2014 - 11:13 | 4621217 Gamma735
Gamma735's picture

Rats flee a sinking ship.

Thu, 04/03/2014 - 11:16 | 4621236 rehypothecator
rehypothecator's picture

Isn't a good way to strengthen the banking system to let the insolvent ones FAIL?  So their assets can be purchased by stronger banks that have made better decisions?  I.e. the opposite of what the Fed does.  

Thu, 04/03/2014 - 11:18 | 4621247 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

There are no insolvent banks. What are you babbling about for goodness sake. Guards!

Thu, 04/03/2014 - 11:57 | 4621382 knukles
knukles's picture

The article's wrong.

His name was Robert Paulson

Thu, 04/03/2014 - 12:07 | 4621416 smlbizman
smlbizman's picture

i'd b more impressed if it was a suicide note attached to his lapel with a hilti nail.....

Thu, 04/03/2014 - 13:51 | 4621785 TruthHunter
TruthHunter's picture

Who is John Galt?

Maybe Stein knows...

Thu, 04/03/2014 - 11:55 | 4621376 hot sauce technician
hot sauce technician's picture

Don't confuse us with common sense.

Thu, 04/03/2014 - 11:36 | 4621321 Kirk2NCC1701
Kirk2NCC1701's picture

No, MADE to quit.  For double-crossing the double-crossers.

Thu, 04/03/2014 - 11:39 | 4621333 insanelysane
insanelysane's picture

He really wanted to submit the following registration letter:

I could handle working for Bernanke because he could lie with some panache but this Yellen person, not so much.

Thu, 04/03/2014 - 11:12 | 4621214 PlusTic
PlusTic's picture

First rat to leave the ship!

Thu, 04/03/2014 - 11:21 | 4621258 101 years and c...
101 years and counting's picture

some rats never got on the ship (Summers).  the largest rat already jumped (the original bubble blowing fuck..bernanke) and now we have the stupid fat cow running the show.  and people still have faith in the fed?  

Thu, 04/03/2014 - 11:39 | 4621332 Cthonic
Cthonic's picture

first rat: greenspan

Thu, 04/03/2014 - 11:45 | 4621350 ParkAveFlasher
ParkAveFlasher's picture

Was he around in 1913?

Thu, 04/03/2014 - 11:57 | 4621368 Cthonic
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No, we're talking in the post-Nixon age.  You're referring to Herr Paul Warburg.

Thu, 04/03/2014 - 11:58 | 4621387 ParkAveFlasher
ParkAveFlasher's picture

I'm thinking it's the same ship run adrift or run aground, the unanchored USS Dollar.

Thu, 04/03/2014 - 11:13 | 4621219 Rainman
Rainman's picture

This resignation has something to do with rats and a ship.

Thu, 04/03/2014 - 11:13 | 4621220 Dr. Engali
Dr. Engali's picture

Get the fuck out while the getting is good. 

Thu, 04/03/2014 - 11:36 | 4621323 DeadFred
DeadFred's picture

It took him two years to get Fed up with the system. Does that means he's a fast learner or a slow one.

Thu, 04/03/2014 - 11:13 | 4621222 Seasmoke
Seasmoke's picture

Does a Tribesman ever really leave the Tribe ???

Thu, 04/03/2014 - 11:13 | 4621224 SWCroaker
SWCroaker's picture

"Which one is that?"

"It doesn't matter, he wears that armor, he dies!"

Thu, 04/03/2014 - 11:14 | 4621227 Bill of Rights
Bill of Rights's picture

Jump you fuckers....jump!

Thu, 04/03/2014 - 11:14 | 4621228 moneybots
moneybots's picture



Yellen says savers wear many hats.

Thu, 04/03/2014 - 11:44 | 4621349 yogibear
yogibear's picture

While Yellen is the ditzy leader on the fed.

How many fall asleep while Mrs debtfire is talking.

Thu, 04/03/2014 - 13:21 | 4621643 Squid Viscous
Squid Viscous's picture

but not yarmulkes, they're too smart for that "saving" routine

Thu, 04/03/2014 - 11:15 | 4621229 SheepDog-One
SheepDog-One's picture

Yea, goin back to get my nice secure tenure while the gettin is still good, see youz suckers later.

Thu, 04/03/2014 - 11:16 | 4621237 Son of Captain Nemo
Son of Captain Nemo's picture

Good move Jeremy.  You got your lawyers in the front and in the back of you ready to plead #5 as you mosey on out of there...

Janet got you scared?

Be sure you give your attorneys business cards to all your colleagues.  I'm sure they'll be needing them here shortly as well as this will certainly not be a one time event!

You certainly are predictable in putting the "J" in Jeremy!!!


Thu, 04/03/2014 - 11:40 | 4621335 Cthonic
Cthonic's picture

he can probably expect pro bono representation from the likes of Skadden, Arps, Slate, Meagher & Flom

Thu, 04/03/2014 - 11:17 | 4621240 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Stein must think very highly of Yellen ...

Like Warsh before him, younger guy who was trying to think about sh-t. Like address problems.

Warsh left and made the rounds with Stan D.

But these peeps at the FED are simply priests in the church of money. It's blind ideology folks.

Thu, 04/03/2014 - 11:17 | 4621241 Everybodys All ...
Everybodys All American's picture

Back to creating more ignorant Keynesian graduates with overrated economics degrees from an Ivy school or take the nail gun. Which would you choose.

Thu, 04/03/2014 - 11:18 | 4621243 Save_America1st
Save_America1st's picture

"Stein plans to return to teaching at Harvard but in his resignation letter noted that more work is needed on the job market and that the financial market needs strengthening."


Well, I'm sure Old Yellen will take that as a mighty endorsement for more printing.  QE forever...until this whole thing crashes and burns.  CTRL-P, bitchez.

Keep stacking phyzz, food, water, ammo and ammo delivery systems, etc....they're the only things that are going to save your ass after the GCR.  (Global Currency Reset)

Thu, 04/03/2014 - 11:18 | 4621246 SheepDog-One
SheepDog-One's picture

Must....keep QE coolant......flowing.....to......credit....print you bitch.....print.....

Thu, 04/03/2014 - 11:20 | 4621255 q99x2
q99x2's picture

He's going back to teaching graduates how to become waitors.

Thu, 04/03/2014 - 11:23 | 4621264 asscannon101
asscannon101's picture

"...but in his resignation letter noted that more work is needed on the job market and that the financial market needs strengthening."


Poppycock!! We're in the midst of a RECOVERY, dammit!! MOARWARD!!

Thu, 04/03/2014 - 11:23 | 4621266 Bill of Rights
Bill of Rights's picture

Criminal Inquiry Said to Be Opened on Citigroup - NYTimes.com


 Just as Citigroup was putting a troubled past of taxpayer bailouts and risky investments behind it, the bank now finds itself in the government’s cross hairs again.

Federal authorities have opened a criminal investigation into a recent $400 million fraud involving Citigroup’s Mexican unit, according to people briefed on the matter, one of a handful of government inquiries looming over the giant bank.

The investigation, overseen by the F.B.I. and prosecutors from the United States attorney’s office in Manhattan, is focusing in part on whether holes in the bank’s internal controls contributed to the fraud in Mexico. The question for investigators is whether Citigroup — as other banks have been accused of doing in the context of money laundering — ignored warning signs.

Thu, 04/03/2014 - 11:23 | 4621268 JenkinsLane
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For some reason I can't help but think of Kim Jong-il's solo in Team America: World Police.

Thu, 04/03/2014 - 11:23 | 4621270 moneybots
moneybots's picture

"Waiting for decisive proof of market overheating may amount to an implicit policy of inaction on this dimension."


I would replace may with does.

Thu, 04/03/2014 - 11:26 | 4621279 3.7.77
3.7.77's picture


Thu, 04/03/2014 - 11:34 | 4621309 BearTrap
BearTrap's picture

This morning FED decided to raise Stein's salary by +2.0%. But 30 mins later came Harvard and offered him +4.2% more. No wonder he quit.


Thu, 04/03/2014 - 11:35 | 4621317 Save_America1st
Save_America1st's picture

His Name Was Jeremy Stein...

Thu, 04/03/2014 - 11:42 | 4621344 insanelysane
insanelysane's picture

I never hear O demanding more diversity on the Fed.

Thu, 04/03/2014 - 11:41 | 4621341 yogibear
yogibear's picture

LOL, it's official from here on there are no more bubbles. 

Trillions more of Fed QE money set to pump this market to S&P 10,000.

CNBC claims it's the new normal.  

It the meantime Yellen tells the media she doesn't see any bubbles.

Thu, 04/03/2014 - 11:56 | 4621379 bagehot99
bagehot99's picture

And Lord Nelson famously saw no ships, as he put the telescope to his blind eye.

He, of course, knew what he was doing. The Fed, OTOH, genuinely doesn't seem to preceive any risk.

Thu, 04/03/2014 - 11:56 | 4621380 khakuda
khakuda's picture

On Stein's resignation, Yellen commented, "We tired of Jeremy's bad attitude.  He was paid to put the ink in the printer, not express his views."

Thu, 04/03/2014 - 11:59 | 4621389 Cthonic
Cthonic's picture

And isn't this the guy whose nomination republicans originally filibustered?  Anyone know the inside story on that?

Apparently they'll be down to four members on the board, is that even a quorum?


Thu, 04/03/2014 - 12:05 | 4621402 The Wisp
The Wisp's picture

So now they don't even Need a Token Detractor ?


Thu, 04/03/2014 - 12:05 | 4621405 dbTX
dbTX's picture

Gpong back to Harvard so he can screw up some more minds.

Thu, 04/03/2014 - 12:06 | 4621411 dbTX
dbTX's picture

It's going back, pardon the fat finger.

Thu, 04/03/2014 - 12:06 | 4621414 boeing747
boeing747's picture

He just wants to play with keyboard instead of nailgun.


Thu, 04/03/2014 - 12:06 | 4621415 piss pants
piss pants's picture

They should replace him with Ben Stein

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